Hotel profits in Dubai decline in October

The decrease in revenue per available room (RevPAR) was compounded by significantly lower food and beverage revenues which fell 12 per cent. - File photo

Five and four star hotels in Dubai continued to experience weakening average room rates (ARR) in October, falling 8.1 per cent to $312.08 while occupancy levels remained strong, but marginally lower than the same period last year at 82.9 per cent, a new market report revealed.
HotStats said in its October market  report  that the decrease in revenue per available room (RevPAR) was compounded by significantly lower food and beverage revenues which fell 12 per cent, driving total revenue per available Room (TRevPAR) 8.8 per cent lower, to $423.54. Higher operating expenses compounded lower overall revenues, reducing gross operating profit per available room (GOPPAR) by 17 per cent to $194.64.
Analysts at STR Global Dubai also reported last week double-digit decreases in Dubai hotel' ADR (-11 per cent to Dh871.96) and RevPAR (-13.2 per cent to Dh697.20) in October. "The shift of Eid Al Adha from October 2014 to September 2015 negatively affected performance, especially at the beginning of the month. ADR in the market has continued to decline in year-over-year comparisons as the market prices more competitively to try to stimulate the traditional levels of high demand, STR said in a report.
Hotels across the experienced a 0.7 per cent decrease in occupancy in October to 78.5 per cent as well as double-digit drop in average daily rate (-10.3 per cent to Dh753.30) and revenue per available room (-10.9 per cent to Dh591.31). According to STR, supply growth (+5.1 per cent) outpaced demand (+4.4 per cent) for the month, resulting in the slight dip in occupancy. STR Global analysts attribute the drop in ADR to a weak euro. With a decrease in international arrivals from Europe, hotels have lowered rate in an effort to sustain demand.
 Hotels in Manama witnessed a decline in all performance indicators in October, driven by weak demand after reporting strong results in September. Occupancy levels fell 6.2 percentage points to 50.8 per cent, impacting ARR and RevPAR which fell 14.6 per cent and 24 per cent  respectively.
Although beverage revenues increased 5.6 per cent  during the month, the increase was unable to offset declines in food and banqueting revenues. Softer TRevPAR levels and increased operational expenses impacted profit margins with GOPPAR falling 41.2 per cent  to $47.31.
Hotels in Amman witnessed a 9.1 percentage point growth in occupancy to 67.9 per cent  in October, offsetting a 5.6 per cent  decline in ARR. The renewed demand drove an increase in all performance indicators including RevPAR which rose 8.9 per cent to $103.24.
 In Saudi Arabia, hotels in Riyadh witnessed strong demand levels in October with four and five star hotels recording a 12.0 percentage point increase in occupancy to 66.3 per cent. Hoteliers were unable to capitalise on the strong demand as ARR fell by a marginal 1.1 per cent  to $226.07. The increased occupancy levels had a positive effect on the remaining performance indicators with RevPAR and TRevPAR rising 20.8 per cent  and 18.5 per cent  respectively.
- issacjohn@khaleejtimes.com